Korean companies have used the current arrangement method (CAM) when they present the statement of financial position. Under the International Financial Reporting Standards (IFRS), however, they are allowed to select either CAM or the non-current arra...
Korean companies have used the current arrangement method (CAM) when they present the statement of financial position. Under the International Financial Reporting Standards (IFRS), however, they are allowed to select either CAM or the non-current arrangement method (NCAM). 156 samples (9.74%) among 1,602 manufacturing firms adopted NCAM after IFRS was mandatorily applied in 2011. We address two research questions motivated by the arrangement method of the financial position. Firstly, we analyze the characteristics of the companies adopting NCAM. Those companies are characterized by high percentage of non-current assets in the total assets, low debt ratio, and significantly low risk of bankruptcy. The results indicate that NCAM companies emphasize the relative advantage on their financial position using the presentation order. Secondly, we examine whether differential value relevance exists by for the arrangement method. We find that the value of non-current assets and the shareholders' equity of NCAM companies is more relevant than that of firms using CAM is. The results indicate that information users are affected by the presentation order of in the statement of financial position.